MACD (Moving Average Convergence Divergence) in Forex

MACD (Moving Average Convergence Divergence) is a popular technical indicator used in Forex trading. It helps traders identify trend changes, momentum, and potential buy/sell signals. Comprising two exponential moving averages (EMA), the MACD line subtracts a longer-term EMA from a shorter-term EMA. The resulting line oscillates above and below a zero centerline. When the MACD line crosses above the signal line (a moving average of the MACD line), it signals a bullish trend, while a crossover below indicates a bearish trend. Additionally, traders observe divergences between the MACD and price action, as it may signal an impending trend reversal, making it a valuable tool in Forex analysis.